SOLVENCY II COMPLIANCE Made simple with TAGETIK

Background

Solvency II Reporting Challenges

Tagetik Solvency II Solution

The Tagetik Difference

Tagetik in Action

Agenda

• EU Directive to codify and standardize insurance

regulations

• Define amount of capital EU insurance companies must

hold to reduce risk of insolvency

• A single regulation to enhance consumer protection

• Similar to Basel III for Banks

• Will come into effect on January 1, 2016

• Impacts all insurance companies with EU operations

Solvency II Background

Solvency IITurning significant change

into competitive gain

Solvency II: The 3 Pillars

• Non life underwriting

• Life underwriting

• Special health

underwriting

• Interest rate

• Market

• Operational

• Concentration

QUANTITATIVE REQUIREMENTS

Balance sheet evaluationSolvency Capital Requirement (SCR)Minimum Capital Requirements (MCR)

QUALITATIVE REQUIREMENTS & SUPERVISION

System of GovernanceOwn risk & solvency assessment (ORSA)Supervisory Review process (SRP)

DISCLOSURE REQUIREMENTS

Public disclosure of FCSR (Financial Condition and Solvency Reports)RSR (Common Supervisory Reporting)

Pillar I

Pillar II

Pillar III

Risk

Solvency II: Law Requirements and Deadlines

2009 2010 2011 2012 2013-14 2015-16

Framework Directive (L1)

Definition of principles for the solvency system

Implementing Measuring (L2)

Regulation adoption(Dir. SII)

Supervisory standards (L3)

Guidelines to guarantee a convergent application and implementation of regulations

Regulation transposition by national authorities

2016 Solvency II enforcement

DirectiveDevelopment

Directive AdoptionCouncil & Parliament

Implementation Member States

QIS51° Tagetik POC

Tagetik Pre-packaged

solution

Tagetik Maintenance

Service

Solvency II: Reporting and Compliance Challenges

• Data Integration and Quality

• Complexity of Calculations

• Changing Regulatory Requirements

• Creating and Maintaining Governance Processes

• Differing Financial vs. Management Reporting and

Disclosure Requirements

• Reconciling Different Reporting Formats

• Ensuring Adequate Audit Trails and Controls

Solvency

II

Solvency II: Reporting Challenges

Source: KPMG

Solvency IRegulatory

Requirements

Solvency IIRegulatory

Requirements

Solvency IIIManagement Model

Surplus Capital

TechnicalProvisions

Surplus Capital

Capital Add-on

SCR

MCR

Margin

Best Estimate of Liabilities

Surplus Capital

IECR

Margin

Best Estimate of Liabilities

3

2

1

3

2

1a

1b

Standard SCR

Adjusted SCRMGF

RMM 1. Technical provisions to match

insurers’ liabilities

a) Best estimate of liabilities

b) Market Value Margin

2. Regulatory capital requirements

3. Capital held in excess of regulatory

capital requirements

Solvency II: State of Readiness in Europe

Figure 1: European Solvency II readiness

60%

50%

40%

30%

20%

10%

0%Already

compliantIn the courseof 2014

In the courseof 2015

In the courseof 2016

In the courseof 2017

Later

2%

56%

20%

32%

58%

11%

19%

1% 1%

2013

2012

Figure 2: Overall implementation status by pillar

2012

2013

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0Pillar 1 Pillar 2 Pillar 3

1. The requirements are not met

2. Some of the requirements are met

3. Most of the requirements are met

4. All of the requirements are met

5. The company already goes beyond the Solvency II requirements

Overall, the insurance industry is on track to implement Solvency II by 1 January 2016; however, a significant amount of work is needed between now and then to address preparedness across all three pillars.

Source: E&Y European Solvency II Survey 2014

“With Tagetik’s solution in place, TVM is proud to be the first European insurance company with an integrated and standardized statutory and Solvency II-compliant reporting processes.”

Emile Kaal, Finance directorTVM

Leading the Way to Solvency II Compliance

The Tagetik Solution: Pre-packaged Solution for Solvency II

Pre-built complete set of accounts, data entry forms, reports, diagnostic checks, calculation rules, narrative templates and XBRL output to satisfy the EIOPA requirements for Solvency II

Tagetik offers a service package to maintain alignment with changes to EIOPA regulations

Tagetik distributors and partners offer a service to maintain national specific requirements

Compliance now, compliance in the future

What does the pre-packaged solution cover?

Solvency II Pre-Packaged Solution Scope

Pillar I Pre-packaged calculations to cover standard formulas

Pillar II Expected Solvency position & ORSA narrative elements

Pillar III 100% coverage EIOPA Requirements with QRT, FCSR and RSR

Tagetik: The Unified Approach to Solvency II

Create a foundation of reliable, traceable data

Loading and mapping from

internal/external data sources

Data collection and consolidation

Workflow

SCR and MCR Calculation

Integration with financial data

Data validation

As the basis for all reporting and disclosure requirements

Financial Reporting

Management Reporting

Dashboards

Disclosure Management

XBRL output

Integration with SharePoint

datamodel TVMfase 1

Mgt.Reporting

QRT’s, XBRL, Narratives

Generalledger

Tagetik Solvency II pre-packagedsolution

Tagetik

FinancialStatements

Data model & calculations Solvency II

pre-packagedsolution

Local SIIrequire-ments

QRT source data

Pillar 1source data

Inputs Outputs

ETL

Customer Data Model

Tagetik Solvency II Architecture

• All QRTs

• Annual

• Quarterly,

• Group,

• Solo

• Data-checks and log-files

• Templates for RSR/ SFCR

• Updates from EIOPA

• XBRL output

• Documentation

Pre-packaged Tagetik application with all building blocks

Tagetik Solvency II Solution Components

The Tagetik Difference

Tagetik “Full Service” Solvency II Reporting

• Built-in intelligence

• Pre-built calcs and reports

• Workflow and validation

• Project consulting

• Technical consulting

• Check-up consulting

• Training and support

• Regulatory updates

Achieve fast Solvency II compliance with our Pre-packaged application and flexible customizations

Streamline your data generation, consolidation, reporting and disclosure processes to save time, effort and costs each step of the way

Stay aligned with changing regulations with regular Pre-packaged application maintenance

Benefit from Tagetik’s rich project experience in the European financial services sector

Unify financial, management and regulatory reporting as well as other CPM processes in a single product

Tagetik: One Solution for Solvency II

Solution Benefits

Tagetik provides an excellent audit trail. TVM can now easily trace and show the adjustments that derive statutory consolidation and Solvency II reporting from one source.

Auke Jan HulskerSofia Consulting

Tagetik: One Solution for Solvency II and Beyond

XBRL

IFRS 4

Regional Disclosures

Financial Statements

Board Books

Future Regulations

A Single Platform for Multiple Reporting and Performance Management Needs

IFRS Group Financial Statement Consolidation

MVBS – Market Value Balance Sheet ConsolidationOwn Funds (OF)

Quantitative Reporting Templates (QRTs)Regular Supervisory Reporting (RSR)

Solvency & Financial Condition Report (SFCR)

Process Details

Actual / Monthly ReportingForecastPlanning

IFRS Consolidation

MVBS

Solvency II Reporting

Planning & Forecasting

Many Insurers Trust Tagetik for Solvency II

The Company: TVM

Founded in 1962, 400 full-time employees

Netherlands-based; offices in Belgium, France, Germany

Transportation Insurance

Project Scope Results/Benefits

• Local close

• Align processes to simultaneously address statutory,

Solvency II and management reporting

• Automate consolidation and reporting environment

for 30 separate company entities

• Create a single solution for data collection and

storage, entry forms, consolidation, reporting

• Provide built-in financial controls and validations,

with full traceability and transparent audit trails

• Automated Solvency II Pillar 3 calculations and

reports

• Meet Solvency II requirements in parallel with statutory

reporting, interco elim, and fast close

• First European insurance company to standardize

statutory and Solvency II-compliant reporting

• Simple and cost effective solution for meeting the

reporting requirements of Solvency II

• Automated process consumes fewer resources

The Company: Gruppo Credem

Listed on Italian stock exchange since October 1997

Headquarters in Reggio Emilia, Italy

Commercial Banking, Insurance,Asset Management

• Cover Solvency II P2-P3 and local requirements

• Single-product to manage supervisory reporting,

planning & budgeting and more

• Enterprise Data Warehouse to support new

infrastructure, integrate with P1 calculation engines

• Reduce operating risk

• Enhance information quality, efficiency, availability

• Enable users independence

• Single platform for multiple requirements: reporting,

budgeting, planning etc.

• Full compliance with Solvency II P2 and P3

• Complete auditability for Solvency II processes and data

changes throughout the process

• Collaborative reporting on P2, integrated with DWH

• Greater analysis capability for CFO and quicker answers

for CEO

• Better business management capabilities for Board

Project Scope Results/Benefits

The Company: Talanx AG

Headquarters in Germany, operating in 150 countries

22,200 Employees Worldwide

Global B2B Insurance Focus

• Meet Solvency II P3 reporting requirements in Q1 2014

• Implement a single solution for solo/group reporting

• Functional guidance and support for local Pillar 3

• Coordination and synchronization of parallel projects

Support of the standard formulas for Pillar 1

• Pillar 3 reporting must consider the public and capital

market perception – i.e. the Solvency Financial Condition

Report (SFCR)

• Tagetik selected since it was already

successfully used for IFRS reporting

• Solvency II solution supports all Pillar 3 reporting

requirements

• Single software tool for solo/entity and group

reporting and provides support for standard

formulas

Project Scope Results/Benefits

DemoTagetik in action

• Solvency II deadline is approaching quickly

• Tagetik is a leader in Solvency II solutions

• Achieve compliance fast and compliance that will last

• Leverage the success of other leading insurance companies

• Stay ahead of changing regulations and much more

• For more information:

http://www.tagetik.com/solutions/process/external-rep

Why Tagetik for Solvency II? Why Now?

www.tagetik.com

Thanks

Stellan RosmanCustomer Solution Manager

Tagetik Nordic